City Pub Group H1 lfl sales up 14%, well placed to take advantage of new acquisition opportunities: City Pub Group, the owner and operator of premium pubs across southern England and Wales, has this morning reported that its trading continues to be strong, with like-for-like sales up 14% in the 26 weeks to 25 June 2023. It said that the strong like-for-like performance is being driven by its strategy to further premiumise its estate and a “continuous, relentless focus on customer service”. For the first 38 weeks of the year like-for-like sales were up 12.4%, which the business said was “very encouraging given the wet summer we have recently experienced and the recent ongoing train strikes”. Revenue for the half year stood increased 21% to £31.7m (H1 2022: £26.1m), while adjusted Ebitda was £3.3m (H1 2022: £3.4m) and adjusted pre-tax profit was £0.8 million (H1 2022: £1.3m). Current net debt is circa £8m and the director’s valuation of the pub estate, now including the Mosaic Pubs is circa £171m. During the period, the 42-strong business acquired The Bridge in Barnes for £0.5m, and disposed of The Yard in Cambridge surrendering the lease. It also invested circa £2m on upgrading six of its existing sites. The company said: “As the UK economy continues to adjust to higher interest rates, the group continues to adopt a measured approach to its expansion programme. It believes its focus on organic growth and acquiring circa five new pubs per annum will stand the business in good stead for when the economy starts to improve.” In June, the business took control of Mosaic Pub and Dining Group through owning 53% of the equity. It said it will make a further offer to the remaining shareholders before the end of the tax year, i.e 5 April 2024. Mosaic operates nine pubs of which six are in London and three in Birmingham, seven are freehold and two are leasehold. These are currently being integrated into the City Pub trading estate. It said: “We anticipate future sales growth from these pubs and cost savings. Whilst the Mosaic Group is well invested, we anticipate some investment in refurbishment to enhance trading performance.” It said that trading across the summer since the half year end had remained positive and that it “continues to trade in line with full year expectations”. The company said it anticipates continued trading momentum in H2 FY23 which benefits from a very active sporting calendar. It said that Christmas bookings are ahead of where they were this time last year. Clive Watson, chairman of City Pub Group said: “The company is in a strong position with very low net debt and what we believe is amongst the lowest gearing in the sector. We look forward to a strong second half – Christmas bookings are significantly up and the company is well placed to take advantage of new acquisition opportunities. The Mosaic estate has been integrated and is showing significant increases in like-for-like sales. The economy remains challenging but we are well placed to take advantage of any future upturn. The group remains in a very strong financial position with low levels of bank debt and operational gearing, as well as owning a predominantly freehold pub estate (63%). From a retail perspective, we continue to premiumise our offer and aim to achieve further organic growth from the existing estate. We seek to become as efficient as possible without compromising our levels of hospitality through further savings across the estate, whether it be better use of energy as a result of our ESG approach, better labour scheduling or improved development of our food menus. The market for pubs has now become more realistic and whilst our continued focus remains on delivering organic growth, we are currently engaged in negotiations on a small number of appropriately priced acquisitions. The ambition within City Pub Group remains strong. We have an experienced and committed head office team whose focus is to make City Pub Group one of the best independent pub retailers on the market. All our retail staff are incentivised with a weekly bonus which not only helps improve their renumeration but encourages them to engage in an entrepreneurial way. The pub sector, despite all challenges it has faced in the last three to four years, remains resilient. Undoubtedly, there will be winners and losers going forward. Those pub groups that embrace technological change will be able to further increase their market share and increase returns for their shareholders. As a group we are focused on being innovative, improving sales per square foot, generating a high level of operating margins and retaining a strong freehold backed balance sheet with low levels of bank debt. The group continues to improve its financial strength – it has a clear vision of where it wants to be over the medium term. We are targeting an estate of circa 60 quality pubs located in some of the greatest cities across England and South Wales. City Pub Group has become very adept at reacting quickly where we need to, to minimise risk and take advantage of opportunities. Bookings for H2 FY23 are looking strong, particularly around the Rugby World Cup and the important Christmas trading period.”